City and subway finances savior Richard Ravitch dies

 

 New York Times

Richard Ravitch, a politically savvy, civic-minded developer and public citizen who helped rescue New York City from the brink of bankruptcy and its decaying subways from fiscal collapse, died on Sunday in Manhattan. He was 89.

His death, in a hospital, was confirmed by his wife, Kathleen M. Doyle.

Mr. Ravitch never won elective office. But he left an outsize mark on government at every level as one of the backstage wise men recruited to stave off the financial collapse of New York’s Urban Development Corporation in 1975 and, a few months later, of New York City’s own overdrawn municipal accounts.

By rallying public support for inventive means of raising revenue, he was also instrumental in rejuvenating the city’s mass transit system in the 1980s as the chairman of the Metropolitan Transportation Authority.

He later served as New York’s lieutenant governor, enlisted by David A. Paterson in 2009 to lend gravitas to his teetering administration. (Mr. Paterson had succeeded Eliot Spitzer, who resigned in disgrace after a prostitution scandal.)

Mr. Ravitch, who inherited a construction company, also left his mark on the cityscape with signature apartment projects like Waterside and Manhattan Plaza.

A progressive in the tradition of Franklin D. Roosevelt and Adlai Stevenson, he espoused an Emersonian faith in democracy as a dynamic symbiosis between politics and good government. Invoking a lesson learned from Daniel Patrick Moynihan, whose successful Senate candidacy he helped promote in 1976, Mr. Ravitch recalled in his 2014 memoir, “So Much to Do: A Full Life of Business, Politics, and Confronting Fiscal Crises,” “There is a more powerful connection than people think between the world of ideas and the world of practical politics.”

NY's financial health in jeopardy

From the NY Times:

New York State faces long-term budget problems that are compounded by the teetering finances of its local governments, an aging infrastructure and the possibility of severe cuts in federal funding, a panel of fiscal experts said Tuesday.

The State Budget Crisis Task Force, a nonpartisan group, said that New York’s problems had been “papered over with gimmicks” for decades, and that while Gov. Andrew M. Cuomo had taken some steps to rein in spending, the state was still saddled with burdens that would leave it unable to make ends meet in the long run. Over the past decade, the report said, New York had postponed a reckoning by using one-time measures to produce $25 billion in revenue.

Former Lt. Gov. Richard Ravitch, a co-chairman of the group, said the math spoke for itself. “There are expenditures that are growing at a rate faster than revenues,” Mr. Ravitch said. “As long as that happens, then we are on an unsustainable course.”

A report released on Tuesday by the panel, which was also led by Paul A. Volcker, a former chairman of the Federal Reserve, offered a sobering assessment of the state’s finances, raising concerns about its outsize spending on health care and education, its vulnerability to the ups and downs of Wall Street, and the struggles of its local governments to pay retirement obligations.

As one major area of concern, the report highlighted the state’s enormous Medicaid budget, which is larger than those of Florida, Pennsylvania and Texas combined. The report said that while the Cuomo administration had put in place a cap on annual increases in health care spending, it was not certain the measure would drive down costs over the long run.

Reform? What's that?

From the NY Observer:

When Lt. Governor Dick Ravitch came out with his budget reform plan in March, it was greeted with a round of criticism from many corners of the capitol, mostly as many lawmakers attacked it for its reliance on borrowing and plans to weaken their budgetary powers.

But the criticisms were usually delivered with the disclaimer that the plan had its good individual elements. And even as it became clear the plan as a whole was unlikely to be approved, there was an emerging consensus on at least one point: Democrats in the Senate and Assembly both voiced support for a move to GAAP budgeting, a widely accepted superior system of bookkeeping. The Assembly passed it as part of its own budget package, and a set of key Senate Democrats announced a budgetary reform package of their own in April, GAAP included.

But even the relatively slight measure of GAAP—at least when compared to some of the other elements of the Ravitch plan—was apparently too much of a jump for Albany.

Last week, as the legislative session ended for the season—save the minor detail of a fully balanced budget—legislators left town without passing any major elements of budgetary reform, GAAP included.

Of course, while proposals such as GAAP are hailed by fiscal advocates and good government groups, they are loved by everyone. GAAP is a budgeting format that ties the hands of lawmakers in some decisions on the budget—it limits the number of gimmicks that have long been used to balance a budget—something that legislatures are never eager to bring upon themselves without some sort of added benefit elsewhere.

Not only that, but public authorities have failed to comply with new laws regulating them.

Taxing colleges and public authorities?

From the Times Union:

A plan that would require nonprofit organizations -- from private colleges to public authorities -- to pay property taxes is being put together by a high-ranking lawmaker as Democrats who dominate the Senate develop a budget that will come with some real estate tax relief.

"It's our No.1 priority," said one senator headed for a private budget conference of Senate Democrats Tuesday.

Three Senate officials said a budget resolution to be released soon would likely include at least parts of a circuit-breaker bill introduced by Sen. Jeff Klein, D-Bronx, and quite possibly the whole package. The component of Klein's bill most likely to be part of the plan calls for a $290 million STAR program for low-income senior citizens. The circuit breaker Klein envisions would give property taxpayers a credit or rebate based on their income level.

While Klein's proposal would cost money -- Senate officials estimate $1.2 billion -- Senate Majority Leader Pedro Espada, D-Bronx, said he is researching a revenue-raising proposal. It would require nonprofits to pay into the real estate tax base so that tax relief would be spread through a community. He said he wants to include public authorities owned by the state in the group of currently tax-exempt entities that would have to share the real estate tax burden.

"Have nonprofits contribute at a time of national sacrifice," Espada said. "It's not such a bad idea." A person familiar with his plan said he is expected to introduce a bill next week. It is projected to raise hundreds of millions of dollars.

The Espada plan would likely require nonprofit property owners, including private colleges, to pay taxes. He is proposing some exemptions, such as for small nonprofits. It is unclear whether his bill would cover the nonprofit health services network he runs in the Bronx.

The idea follows a plan developed by Richard Ravitch before he became lieutenant governor. He came up with a payroll tax for all New York metropolitan-area employers, including nonprofits, as a new revenue stream for the Metropolitan Transportation Authority.

It sounds interesting until you realize that the MTA is a public authority that owns property and that many public authorities are funded by taxes. So...

Don't hold your breath waiting for the budget

From NY Post:

April fools! Legislative leaders, citing lame- duck Gov. Paterson's huge legal troubles and the late release of a massive, $6 billion borrowing scheme, privately concede there's no chance to get a new state budget adopted by the April 1 start of the new fiscal year.

In fact, many predict there won't be a budget until late June, at the earliest, the time proposed by Lt. Gov. Richard Ravitch to start a newly configured fiscal year in which he wants to begin a multibillion-dollar bailout borrowing program.

Some state budget experts, grappling with a projected $9 billion-plus deficit, forecast a new budget won't be adopted until after the November election, setting a record for lateness.

Budget delays require passage of "continuing budget resolutions" submitted by a governor to keep basic state services functioning.

The laughingstock of all 50 states

From the Wall Street Journal:

Move over, New Jersey, you're getting a run for your tax money as the nation's most dysfunctional state from the once great mecca of commerce and finance known as New York. Politics in the Empire State has become a carnival of spendthrifts, sexual miscreants and the all-purpose ethically challenged.

In the latest sign that the Apocalypse is upon Albany, New York Governor David Paterson announced yesterday that he won't seek election to a full term in November only two weeks after he had announced that he would. Mr. Paterson, a Democrat who became governor in March 2008 after Eliot Spitzer resigned in a prostitution scandal, has spent the past two years lurching from one fiasco to the next.

He's currently being investigated for awarding a lucrative casino contract to a political backer. And this week he was accused of contacting a woman who was seeking a protective order against one of his aides. State police are reported to have pressured the woman to drop her complaint.

Mr. Paterson's troubles have been catnip for "Saturday Night Live," but the state's voters are laughing to keep from crying. New York's budget deficit is an estimated $8.2 billion, due in no small part to state spending that has risen by nearly 70%, or $35 billion, over the past decade. The recent financial crisis has exposed the state's overreliance on tax revenue from Wall Street.

Mr. Paterson has promised several times to stop this, only to give in to the legislature and tax and spend again. He'll now be the lamest of lame ducks, and if he wanted to do the public at least one good turn he'd resign early and let the state be run through next year by his Lieutenant Governor, Richard Ravitch, who is at least competent.

This mess is all part of the culture of Albany, arguably the most corrupt legislature on Earth.